Provided by Adler & Colvin, a group of seasoned attorneys in San Francisco deeply committed to serving the legal needs of the nonprofit sector nationwide. These Guidelines summarize information for educational purposes, and are not intended as legal or tax advice. Consult a qualified attorney concerning the application of the law in any specific factual situation.
Private and community foundations can use their resources to strengthen democracy and invest in voter engagement to support nonpartisan efforts that give voice to the communities they serve.
Foundations can directly conduct, and provide grants to nonprofit organizations to support, a wide range of nonpartisan election-related activities to educate voters and candidates and increase voter engagement and participation. With the exception of prohibiting private foundations from conducting or supporting certain voter registration drives, the Internal Revenue Code places no limit on the amount of nonpartisan, election-related activities a foundation may conduct in pursuit of its charitable or educational purposes.
FOUNDATIONS CAN PARTICIPATE IN BOTH CANDIDATE ELECTIONS AND BALLOT MEASURE CAMPAIGNS:
1. Candidate Elections: Foundations can support or promote a wide range of nonpartisan voter engagement, voter education, and candidate engagement activities as long as they do not support or oppose candidates or political parties; and community foundations cansupport and conduct nonpartisan voter registration drives. Private foundations can support voter registration drives that comply with additional rules discussed below.
2. Ballot Measure Campaigns: Foundations can conduct voter engagement and education on ballot measures, including initiatives, referendums, and bonds, subject to the rules governing lobbying under Section 501(c)(3) discussed more fully below. However, unlike community foundations, private foundations cannot deploy their resources, directly or through earmarked grants to others, to oppose or support ballot measures, except in the limited circumstances described below.
CANDIDATE ELECTIONS
While foundations can support a wide range of nonpartisan voter education, candidate engagement, and get-out-the-vote activities, Section 501(c)(3) prohibits all charities, including private and community foundations, from engaging in activities that support or oppose any candidate, or group of candidates such as a political party, for election to public office.
Being nonpartisan means a foundation cannot endorse or contribute to any candidate campaign nor engage in any communication, conduct, or use of resources that favors or disfavors a specific candidate or party. This includes activities such as rating candidates or labeling them with arguably partisan identifiers such as “pro-choice” or “anti-tax.”
The safest strategy is to make no reference to any candidate or party except in the context of carefully-designed and -implemented nonpartisan educational activities where multiple candidates are presented, or in a context completely separate from any election, such as attempting to influence an incumbent’s performance as an officeholder.
For example, a foundation can stay nonpartisan by inviting all viable candidates for a city council office to participate in a voter education forum or to respond to a questionnaire about where they stand on a range of key issues, and publishing their responses without editing or commentary.
A foundation can provide information on voting or encourage greater voter participation by any community or demographic of people chosen without regard to political affiliation or candidate preference provided it avoids partisan content and acts independently from any candidate or political group.
For instance, a foundation can provide targeted grants to engage new, first-time voters within the Asian American and Pacific Islander communities, or alternatively, voters from an underrepresented, largely Black community in the foundation’s service area. Demographic targeting does not in itself constitute partisan activity.
Further, private and community foundations can educate voters about the candidates by using or funding unbiased, even-handed methods such as nonpartisan debates, forums, questionnaires, voter guides, news reporting, social media, and web links in accordance with IRS guidance.[1] Organizations like Nonprofit VOTE and Bolder Advocacy are available to provide support, information, and guidance on how to provide voter education resources.
PRIVATE FOUNDATIONS AND VOTER REGISTRATION DRIVES
One thing private foundations cannot do easily however, that community foundations can, is conduct or fund a voter registration drive targeted to a specific time or place. A private foundation that wants to conduct or fund a voter registration drive can do so only by making a grant to an organization recognized by the IRS as meeting very specific qualifications, set forth in Section 4945(f ) of the Code, such as conducting its registration drives in five or more states and across multiple election cycles. However, these rules only apply to private foundation grants earmarked or specifically for the purpose of funding a voter registration drive.
General Support or Project Grants: A private foundation may provide general support grants or project grants to an organization that conducts voter registration drives, provided the grant is not earmarked for specific voter registration activities or outcomes. In such cases, the charity may use some or all of the grant for voter registration work, provided there is no oral or written expectation that funds be used for voter registration.[2]
For more, see Bolder Advocacy’s fact sheet on Voter Registration Rules for Private Foundations.
BALLOT MEASURE CAMPAIGNS
About half the states and many localities have ballot measures by which voters may directly approve new laws via public elections. Section 501(c)(3) expressly authorizes public charities (but not private foundations – see below ) to engage in activities designed to influence the outcome of legislation, including ballot measures, provided that such activities do not constitute a “substantial part” of the charity’s overall activities.[2] This federal tax restriction affects only laws passed by legislatures or voters in a ballot measure, not other forms of government action like regulatory, administrative, or judicial decisions. Expenditures to support or oppose a ballot measure may also require reporting under state or local campaign finance laws.[3]
Being a public charity, rather than a private foundation, means that a community foundation can, if it chooses and within its lobbying limits, reflect a view in a ballot measure campaign as a lobbying activity. A community foundation can also engage in any other kind of activity related to a ballot measure, without limit, so long as the activity is charitable or educational and does not reflect a view on the ballot measure, and therefore does not constitute “lobbying” as defined for federal tax purposes.
To determine how best to accomplish its goals and remain nonpartisan, a community foundation seeking to fund voter engagement activities should consult knowledgeable counsel as well as learning from the content of this toolkit and suggested resources.
PRIVATE FOUNDATIONS AND BALLOT MEASURES
Unlike community foundations, private foundations cannot directly support or oppose ballot measures, and cannot earmark grants to do so. For measures placed on the ballot by citizen petition, the law allows private foundations (and other charities) to discuss the subject of the measure, and even express a view about it, until signature petitions begin to circulate. Before that moment, a potential ballot measure is not considered “specific legislation” for federal tax purposes, and referring to it is not lobbying. Once petitions begin to circulate, however, the measure becomes “specific legislation”, and a communication that refers to and reflects a view on the measure thereafter will constitute lobbying unless the communication fits within the exception for “nonpartisan study, analysis, and research”.[4]
A private foundation cannot “earmark” funds for lobbying, including lobbying on a ballot measure. However, the Code provides two safe harbors within which a private foundation can make a grant to a charity that lobbies (on a ballot measure or other legislation), without adverse tax consequences for the foundation. A grant properly made under either safe harbor need not prohibit the use of grant funds for lobbying.[5]
General Support Grant: A private foundation grant that provides “general support” to a public charity that the grantee is free to use for any of its activities will not be considered “earmarked” for lobbying, even if the grantee chooses to spend grant funds to support or oppose a ballot measure.[6]
Specific Project Grant: A private foundation grant that supports a specific project that includes lobbying will not be considered “earmarked” for lobbying if the amount of the grant does not exceed the non-lobbying portion of the specific project budget.[7]
